CAUCASUS CONCISE

Opinion: A new crisis in US-Iran relations is unwelcome in the South Caucasus

10 October 2017

President Trump's decertification of the Iran deal will put in jeopardy a number of regional projects, says Benyamin Poghosyan in this op-ed

One of the key events shaping the geopolitics of the Middle East in the coming days most probably will be the US President Donald Trump's decision to decertify Iran nuclear deal ( formally called the Joint Comprehensive Plan of Action - JCPOA), signed in 2015. President Trump has been a vocal opponent of the deal since he entered the Presidential race, and continued his tough stance on Iran after his election. The latest vivid example of this approach was President Trump's speech at the 72Session of the UN General Assembly in September. The US President accused Iran of spreading terrorism and undermining peace throughout the entire Middle East. He explicitly stated that the Iran deal was one of the worst and most one-sided transactions the United States had ever entered into, and that the deal was an embarrassment to the United States.

The likely decertification by President Trump will not automatically trigger the cancellation of the deal by the US government. The burden of the final decision will fall on the US Congress which will have to choose whether to reinstate the punitive sanctions on Iran or not. The elaboration of a decision will take time. Given the statement of Secretary of Defense James Mattis on October 3 at a Senate hearing in which he said that the Iran deal was in the US national security interest, it is evident not all in the US establishment are fond of drastic and hasty actions against Iran. However, the mere fact of decertification of the deal by President Trump will resonate all over the Middle East, triggering a change of calculus in many regional capitals.

The South Caucasus is one of the regions which will immediately face the impact of any negative developments on Iran. This is especially the case for Armenia. The landlocked country with no peace no war relations with Azerbaijan, and closed borders with Turkey, has only two routes to connect with the world - via Georgia and via Iran. Currently approximately two thirds of Armenian trade passes through Georgia, and the remaining part through Iran. However, the growing relations with Iran are key for Armenia to diversify its trade. Since 2016 negotiations have been underway between Iran, Armenia, Georgia, Greece and Bulgaria to launch the new Persian Gulf - Black Sea transit corridor. It envisages the developments of new routes to bring Iranian products through Armenia, Georgia and via the Black Sea to Europe. If successfully realized this project would play a key role in overcoming Armenia's isolation imposed through the joint efforts of Turkey and Azerbaijan. For now, all regional energy and transport projects are bypassing Armenia. Baku - Tbilisi - Jeyhan oil and Baku - Tbilisi - Erzurum gas pipelines as well as Baku - Tbilisi - Kars railway, which official opening is scheduled for October 30, are out of Armenia's reach.

Another possibility for Armenia is to launch negotiations with China to include Persian Gulf - Black Sea project into the "One Belt One Road" initiative and involve multibillion Chinese investments. The possible signature of a Free Trade Agreement between the Eurasian Economic Union (EAEU) and Iran may create new opportunities as Armenia is the only EAEU member state which has a land border with Iran. Thus, companies from Russia and other EAEU member states may establish large scale production lines in Armenia and export products to the 80 million strong Iranian market. The upcoming signature of Comprehensive and Enhanced Partnership Agreement between Armenia and the EU will create new possibilities for Armenia to take a role of bridge between the EU and Iran. Both Iranian and European companies may use Armenia as a launch pad to enter EU and Iran markets. Before the end of this year Armenia is going to open a Free Economic Zone in Syunik region bordering Iran, and negotiations are underway with Iranian companies to actively involve them into this project.

All these developments gained momentum after the JCPOA signature in 2015. Any unilateral steps by the US towards the cancellation of the deal may create obstacles for the implementation of the above-mentioned projects. As a result, Armenia may face problems in its efforts to overcome its isolation and diversify its trade.

Iran is one of the key partners of Azerbaijan. The two countries share similar Shia identity, and more than 10 million Azeri speaking population reside in Iranian regions bordering Azerbaijan. Economy plays a key role in relations between the two states. Azerbaijan, Iran and Russia are jointly developing North - South corridor which will connect India with Northern Europe via Iran, Azerbaijan and Russia. The project envisages the connection of Azerbaijani and Iranian railroads to facilitate the cargo transportation. Any tensions raising around Iran may complicate the implementation of the project and deprive Azerbaijan of the potential geo-economic and geopolitical benefits.

Georgia has limited economic and political relations with Iran. The policy of euro-Atlantic integration makes Iran wary of cultivating close ties with Georgia. Nevertheless, in recent years there has been some boost in economic cooperation between the two states. The Persian Gulf - Black Sea corridor is one of the key projects involving Georgia and Iran, another opportunity may rise if Armenia, Georgia and Iran will link their energy transmission lines. Currently the construction of a new Armenia - Georgia and Armenia - Iran high voltage electricity transmission lines is underway. Starting from 2019 all three states will be able to implement electricity swaps. In the long-term perspective Armenia and Georgia may become an alternative transit route for Iranian gas exports into EU. However, Georgia will suffer less than Armenia and Azerbaijan if the situation around Iran worsens significantly.

For all the three South Caucasus countries a new crisis in relations between the United States and Iran is very unwelcome. All three have been seeking ways of exploiting the new possibilities arising out of the 2015 nuclear deal, and the subsequent end to sanctions, to promote new trade and communications initiatives. In all three capitals governments are watching events in Washington, hoping the storm clouds will clear soon.

Source: Dr. Benyamin Poghosyan is the Executive Director of the Political Science Association of Armenia. He contributed this op-ed to commonspace.eu

photo: The ministers of foreign affairs of France, Germany, the European Union, Iran, the United Kingdom and the United States as well as Chinese and Russian diplomats announcing the framework for a Comprehensive agreement on the Iranian nuclear programme in Lausanne on 2 April 2015). (archive picture)

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